Supreme Court: In a set of two cross civil appeals one by the Tamil Nadu Medical Services Corporation Limited (‘Corporation’) and the other by the Tamil Nadu Medical Services Corporation Employees Welfare Union (‘Union’), against the judgment and order of the Madras High Court wherein the grant of permanent status to the workmen employed in the Corporation was in question, the Division Bench of Sanjay Karol* and Prasanna Bhalachandra Varale, JJ. held that the Corporation could not have denied the permanent status to the workmen if they have worked consecutively for more than 480 days in a period of 24 months. The Court also concluded that the was applicable to the Corporation.
Background
The Corporation was incorporated under the and its management is under the State of Tamil Nadu. Various workmen were employed in different capacities, including the appellants in the appeal, who sought regularization under the provisions of (‘the Act’). Two separate writ petitions were preferred before the Single Judge of the High Court. On 21-07-2001, it was held that the Act is applicable to the corporation. Pursuant to the said order, the Inspector of Labour passed order dated 31-03-2001, wherein it was concluded that 53 other workmen were in the service of the Corporation continuously for 480 days over a period of 24 months and accordingly they could be granted permanent status.
An appeal assailing the order of the Inspector of Labour and Single Judge’s decision was filed and Division Bench vide order dated 10-12-2009, confirmed both these orders and the Corporation was directed to provide employment to the employees. On 29-03-2010, the Court stayed the operation of the impugned judgment. Subsequently, the Court remanded the matter to the High Court. The High agreed with the judgment of the Single Judge, that it was rightly concluded that the Act would apply on the ground that it was an industrial establishment under Section 2(3)(e) of the Act.
Analysis and Decision
In order to examine that whether the Act is applicable to the Corporation, the Court said that it needs to be considered that whether the Corporation can be termed as an industrial establishment as per the provisions of the Act and whether the members of the Union would qualify as workmen and therefore would be eligible for permanent status under Section 3 of the Act.
The Court on perusal of the relevant provisions, said that for an establishment to be covered under the definition thereof under the (‘1947 Act’), unless it is one of those specifically mentioned, it must satisfy being a ‘commercial establishment’ defined under Section 2(3), which provides that ‘commercial establishment´ means an establishment which is not a shop but which carries on the business of advertising, commission, forwarding or commercial agency, or which is a clerical department of a factory or industrial undertaking or which is an insurance company, joint stock company, bank, broker’s office or exchange and includes such other establishments as the State Government may by notification declare to be a commercial establishment for the purposes of this Act.
Regarding the commercial element in the Corporation, the Court noted the High Court’s finding that, ‘the commercial element was not absent’. The Court said that the submission that the activities conducted by the Corporation did not fall under those mentioned in Section 2(3) of the 1947 Act, was difficult to accept, as the construction work, as admitted by them was carried out for non-governmental bodies such as firms, companies, and individuals.
The Court perused Section 7 of the Act and said that it implies that the Act shall not apply to those workmen who are engaged in the construction of buildings and the like or other construction work be it structural, mechanical, or electrical. Therefore, those establishments and their workmen shall be exempt, who are engaged exclusively, in the work of construction. The Court said that the objective of the Corporation- “to undertake the designing and construction of hospitals and other buildings for the Government, or any other person including local authorities, corporations, societies, trusts, companies firms and individuals,” would not allow the Corporation to wash its hands off the responsibilities under the Act, since the construction work is only one of the many activities undertaken by it. Further, the Court added that to take all the workers out of the purview of the Act, especially, when the said workers, like the members of the Union, were not the ones undertaking the construction was unwarranted. The Court also considered that the employees in question had uninterruptedly continued in service for 480 days or more for 24 months, hence, the Court held that the Act was applicable to the Corporation.
Answering the question that whether the High Court on remand, could have ignored the order of the Inspector of Labour and suggested that the employees raise an industrial dispute questioning their non-employment, the Court said that the scope of remand was limited. The Court clarified that since, the High Court concluded that the Act would apply, there was no reason for it to disturb the finding of the Inspector of Labour and, therefore, it ought to have simply ordered that the order of Inspector of Labour which concluded that the members of the Union be given permanent employment, be complied with.
Thus, the Court dismissed the appeal filed by the Corporation and allowed the appeal filed by the Union.
[Tamil Nadu Medical Services Corporation Limited v. Tamil Nadu Medical Services Corporation Employees Welfare Union, Civil Appeal No.6511 Of 2024, Decided on: 17-05-2024]
*Judgment Authored by: Justice Sanjay Karol
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